PSPCL receives ₹1,100-cr shock; tariff may go up

SC VERDICT Corporation has to refund coal washing charges to L&T for its Rajpura plant

PATIALA: In a jolt to the cashstrapped Punjab State Power Corporation Limited (PSPCL), the Supreme Court has directed it to refund ₹1,100 crore to Larsen & Turbo subsidiary Nabha Power Limited (NPL), Rajpura, for coal washing costs.

The apex court decision will lead to higher cost of generation, which ultimately will lead to higher tariff for consumers. The PSPCL has also to pay the amount to the NPL within three months, failing which it will have to refund the principal amount along with 12% simple interest. The PSPCL is already in dire straits as the Punjab government is yet to clear its power subsidy bill.

The long-term impact of the judgment will allow the NPL to have benefits over the balance term of around 22 years — the remaining time of the power purchase agreement (PPA) between the L&T and PSPCL — as the future deduction by the corporation is going to stop on the basis of this verdict. The overall impact could be ₹7,000-8,000 crore over the entire term of the power purchase agreement.

The NPL was established as a special purpose vehicle (SPV) by the erstwhile Punjab State Electricity Board (PSEB) to develop the Rajpura Thermal Power at Nalash village in Patiala district, where it has a 1,400MW plant.

The PSPCL had rejected the L&T claim to get coal washing charges saying that as per the PPA and ministry of environment norms, the L&T has to use only washed coal for power generation in Punjab.

The L&T contested the PSPCL claim in the Supreme Court saying the PPA mentions using only washed coal, but the washing charges, which comes around ₹350 crore annually, have to borne by the power distributor.

“It’s a shocker for the power corporation as it will lead to increase in generation cost. The PSPCL has failed to defend its case in the apex court. Many vital aspects, which were favouring the PSPCL, were not presented properly. The PSPCL should file an appeal against order,” said a senior official requesting anonymity.

PSPCL chairman and secretary, power, A Venu Prasad said: “Our legal team is examining the judgment and PSPCL management will take a call in the next few days.”

PSPCL has failed to defend its case in the apex court. Many vital aspects, which were favouring it, were not presented properly. An appeal should be filed against the SC order.

SENIOR PSPCL OFFICIAL